CALGARY — Onex Corporation and WestJet have signed off on their deal following the final regulatory approval by the Canadian Transportation Agency of its determination under the Canada Transportation Act.
Under the terms of the agreement, originally laid out in May 2019, Onex and its affiliated funds will acquire all outstanding shares of WestJet for $31 per share. The transaction value is $5 billion including assumed debt.
Also back in May, Onex announced its plans to take WestJet private. WestJet’s common shares will be delisted from the TSE within a few trading days.
Canada’s transportation regulator, the Canadian Transportation Agency, announced Dec. 10 that it had determined the airline will continue to meet Canadian ownership and control requirements.
The CTA noted that Onex chairman and chief executive Gerry Schwartz holds at least 60% of the voting interest in the company and is in a position to exercise voting control over Onex, including at shareholders’ meetings.
“In light of the foregoing, the agency finds that only Mr. Schwartz, a Canadian, will have the means to exercise control in fact over Onex and is satisfied that Onex will be controlled in fact by Canadians should the proposed transaction be executed as filed,” said the CTA’s seven-page decision.
The company will, through subsidiary Kestrel Holdings Inc. have voting control of Kestrel Topco Inc., which will ultimately own and control WestJet and Swoop Inc., the CTA added.
The CTA added that the requirement to be Canadian is an ongoing requirement and that the agency must be notified of any change to its status.
Onex requested on May 31 that the agency to make an advance determination if WestJet and Swoop continued to meet Canadian ownership and control requirements.
In September 2019 Air Canada challenged WestJet’s acquisition by Onex, arguing in a filing to the country’s transportation regulator the deal breaches federal rules that limit foreign ownership of carriers.
Federal legislation limits foreign ownership of a Canadian airline to 49%, with a maximum of 25% for any one foreign investor. Onex, which managed $23.2 billion of invested capital as of Dec. 31, is a private equity firm whose funds include cash from foreign investors.
WestJet shareholders approved the proposed acquisition in July, with 92.5% voting in favour.
Air Canada’s own bid for Transat is also moving through the approvals process.
With file from The Canadian Press